These are the main things you need to do to have a successful business model and to deliver your product or service. This building block of The Business Model Canvas allows you to map out the vital activities you need to undertake to properly function as a business. These activities enable you to deliver your Value Proposition, reach markets, nurture Customer Relationships and create revenue.
Key Activities will differ from business to business depending on your product or service. So, firstly you should establish what your Key Activities are for your Value Proposition. Then consider how these integrate with your Distribution Channels, Customer Relationships and Revenue Streams.
Key Activities can be split into three main categories:
These activities involve the design, manufacturing and delivery of a product.
These activities are more strategic and involve ideation of solutions for specific customer problems. This is a large part of what we do for our customers at Ashton McGill: we help them redesign their businesses to better meet the needs of their customers. Problem Solving is a Key Activity for service organisations.
If your business has a platform as a Key Resource, this will be one of your Key Activities. Platforms can range from networks, to software and even brands, for example eBay or Microsoft. Platform/Network Key Activities involve service provisioning and the management and promotion of your platform.
Key Activities- The Main Takeaway:
As your business grows, a good way to regularly evaluate if these activities remain key within your business model is to establish what value they provide for your customer. Your Key Activities should always allow you to deliver your Value Proposition to meet your customers’ needs.
These are the main assets required for a successful business model. Like your Key Activities, Key Resources enable a business to deliver their Value Proposition, reach markets, nurture Customer Relationships and create revenue. Your Key Resources depend entirely on the type of business you have. They can be owned or rented by your company, or obtained from Key Partners.
There are four different kinds of Key Resources:
Physical assets can include buildings, vehicles or machines and are often capital-intensive.
These include brands, patents and copyrights, partnerships and customer databases.
Human Resources are vital in any company, particularly within creative businesses, for example. These require individuals who have highly specific skills within their niche.
These resources include financial guarantees, cash and lines of credit.
Key Resources- The Main Takeaway:
Whether your resources are tangible or intangible, ensure that they are always working to provide your Value Proposition to customers. Remember, a Key Resource is only key because of the value it provides for your customer base.
This is essentially your network of partners and suppliers which enable you to achieve your Key Activities and provide your Value Proposition. Forming alliances with other organisations can strengthen your business model, limit risks and provide new resources, however it’s important to distinguish between which relationships are key to your business and which ones are not. This section of the Business Model Canvas is used to map out these central partnerships.
Now that we’ve outlined the benefits of forming alliances, let’s consider the motivations for creating these partnerships:
Optimisation and economy of scale
The most common reason for forming business relationships is to maximise resources and activities. These partnerships can help to limit costs through the outsourcing of Key Activities, for example.
Reduction of risk and uncertainty
Tactical partnerships can be formed between companies to limit risk and uncertainty between competitors. However, companies can often still compete in other areas despite having formed strategic partnerships.
Acquisition of particular resources and activities
Businesses will often rely on other organisations to provide resources and implement specific activities instead of having all their resources and activities in-house. The benefits of this can be to gain knowledge, licenses or new customers.
Key Partners: The Main Takeaway- Linking it back to your Value Proposition.
Every element of the Business Model Canvas should enable you to deliver your Value Proposition to customers. So remember to consider what value you are creating through your Key Relationships: how can you effectively outsource Key Activities whilst still delivering on value?
Key Partners, Activities and Resources are fundamental building blocks which underpin The Business Model Canvas. They also link back to the other building blocks we’ve covered already in this series, so remember to step back and take a holistic approach.
Most importantly, try not to get too internally focused. It’s easy when mapping out your business model to remain caught up in the back-end of your business. Try to remain customer centric and consider each of the building blocks from their perspective. After all, like we mentioned earlier, these blocks are only key because of the value they provide for your customers.
Look out for our next blog post in our Business Model Canvas series which will cover the Cost Structure and the Revenue Streams within a company’s business model.